Peabody starts checking Macarthur

US coal giant Peabody Energy said its due diligence on
Macarthur Coal
will particularly focus on the Brisbane-based company’s suite of development projects.

It said yesterday due diligence to help it decide whether to formalise a $16-a-share cash offer was progressing well.

“We are interested in Macarthur’s development projects and how we could best turn them into viable economic operations," a Peabody spokeswoman said.

Macarthur said on Friday it had given Peabody access to a data room and due diligence had begun. “Peabody has until May 3, 2010, to complete its due diligence review," Macarthur said. Peabody asked for a five-day due diligence period, which has been granted over five business days.

Some Peabody executives have flown here to do the due diligence but much of the process is electronic and can be done in the US.

Macarthur’s prospects include tenements close to its Moorvale and Coppabella mines in Queensland.

Peabody reported last week a fall in first-quarter profit of 21 per cent on reduced sales and lower prices in Australia, Bloomberg said. Net income fell to $US133.7 million ($144.2 million), from $US170 million a year earlier. Sales rose 4.3 per cent to $US1.52 billion.

Separately, takeover target
Lihir Gold
updated its first-quarter production on Friday, posting a 26 per cent drop in its gold output to 229,757 ounces against the same quarter last year. It forecast gold production this year of 1 million to 1.1 million ounces, up from 960,000 to 1.06 million ounces previously.

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On the takeover proposal from Newcrest Mining, managing director
Graeme Hunt
said: “We continue to be absolutely focused on maximising value and we are open to considering any opportunities that will deliver increased returns to shareholders."

Newcrest’s offer originally valued Lihir at $3.87 a share – a 35 per cent premium to Lihir’s share price before the two goldminers began discussions in mid-February. Lihir rejected the proposal.